Should You Use a Credit or Debit Card?

Mar 23, 2026

WalletHub Managing Editor

Fact checkedFact Checked by Alina Comoreanu, WalletHub Senior Researcher

WalletHub Senior Researcher

You should use both credit and debit cards, as credit cards provide credit-building benefits and money-saving perks while debit cards give you easy access to cash. Even though it’s beneficial to have both, mainly using a credit card for purchases will give you superior fraud protection and more rewards.

Table of Contents

3 Credit or Debit Decisions to Make

Which type of card should you have in your wallet?

We recommend having both a credit card and a debit card, considering the credit building benefits and rewards superiority of credit cards as well as the convenient access to cash provided by a debit card.

Which type of card should you use when making a given purchase?

This is far less straightforward, as the decision typically depends on the amount of the purchase or the particular merchant that you’re dealing with. With that being said, we recommend using your credit card whenever you can, while only pulling out your debit card for low-dollar purchases and when you need cash. Credit cards offer superior fraud protection and the possibility of rewards, after all.

Do you select the “credit” or “debit” option when using a debit card in a store?

We suggest choosing credit and signing for your purchase, as you will benefit from better fraud protection and the ability to meet certain account benchmarks that lead to certain fees being waved or result in rewards.

Should You Get a Credit or Debit Card?

The bottom line is that you need both a debit card and a credit card. A credit card should be your primary spending vehicle, with the debit card being your primary pathway to cash.

Get a Credit Card If:

You want to improve your credit standing: Almost all credit cards report your balance, payment history and other information to the credit bureaus on a monthly basis, which helps you build credit as long as you use your card responsibly.
You need to finance a purchase or transfer a balance. Credit cards allow you to pay off purchases over time, and some even offer introductory 0% APRs for financing. You can also save money by moving existing debts to a credit card with a 0% intro APR on balance transfers.
You want to earn rewards on everyday spending. Many credit cards give rewards on purchases, which can get you 1% to 2% back on everything you spend or even more in certain purchase categories. It’s rare for debit cards to offer rewards.
You want a guarantee of $0 fraud liability. All major credit cards guarantee $0 liability for fraudulent purchases, as long as you report them or your issuer catches them. Debit cards also have fraud protection, but it’s not quite as reliable.
You want supplemental benefits. Many credit cards offer supplemental benefits such as travel insurance, rental car insurance, purchase protection, price protection, return protection or extended warranties on purchases. High-tier debit cards may offer similar benefits, but they’re not as common.

Get a Debit Card If:

You want to withdraw cash. Since debit cards are connected directly to your checking account, it’s easy to use them to get cash from an ATM, bank branch or store checkout counter. The only fees you’ll have to worry about are those from out-of-network ATMs or stores that charge for cash back. Credit card cash advances, on the other hand, impose expensive fees and interest, and interest starts accruing immediately.
You want to avoid debt. With a debit card, you’re only able to spend money that you actually have in your bank account (unless you’ve opted in to overdraft). This prevents you from racking up debt that could be subject to credit cards’ costly interest rates.
You need to make a small-dollar transaction: In some cases, small local merchants may not accept credit cards for transactions under a certain amount, such as $10. In that case, it’s helpful to have a debit card on hand.
You shop at stores that only accept debit cards or credit cards from certain partners: For example, Costco only accepts Visa credit cards, but it accepts most debit cards.

With both credit cards and debit cards, it’s good to get cards on either the Visa or Mastercard network that do not charge foreign transaction fees. This lets you spend money with the largest number of merchants worldwide while having access to the cheapest possible currency conversion. You can also supplement these cards with other credit cards that stand out in different ways – what WalletHub calls the “island approach.”

For more information on the roles debit cards and credit cards can play in your financial arsenal, check out our Debit Card vs. Credit Card Guide.

When to Use a Credit Card or Debit Card

With both a credit card and a debit card in your wallet, you might be unsure about which one to pull out in different situations. We’ve considered the primary types of purchases consumers make and categorized them by preferred spending vehicle below.

When to Use a Credit Card

Online purchases

When you buy things online, it’s better to use a credit card because of the enhanced fraud protection that you get. Considering how many scams and fraudulent sites there are, it’s better to use a card that will give you the maximum amount of safety when shopping online.

You can also earn rewards on online purchases with a credit card, just like you can with in-person purchases.

Gas

You should put your gas purchases on a credit card. Not only do a lot of credit cards offer great gas rewards, but credit cards’ enhanced fraud protection can protect you in the event that you fall victim to a credit card skimmer placed on a gas pump.

The other major reason to use a credit card for gas purchases is that gas stations put a hold on your card (anywhere from $1 to $175), which ties up your credit line while the transaction processes. This hold can last anywhere from a few hours to a few days. If you were to use a debit card instead, that hold would tie up your bank balance, which is a lot less convenient.

Car Rentals

One big reason to charge car rentals to a credit card is that many credit cards offer complimentary rental car insurance that can reimburse you for collision damage and theft. This can save you from having to purchase insurance from the rental car company.

In addition, car rental companies put an expensive hold on your card, usually the cost of the rental plus another few hundred dollars. It’s much better to have the hold tying up your credit limit than actual money in your bank account like it would if you used a debit card.

You can learn more about renting a car without a credit card, including payment policies from the largest rental companies, here on WalletHub.

Hotel Reservations

You can typically book a hotel without a credit card. However, using a credit card is better because of the expensive holds that hotels put on your card – the price of your stay plus additional money for incidentals like room service or damage to the room.

In addition, there are tons of great hotel credit cards and travel credit cards that can save you a ton of money on your stay. You’d miss out on those rewards by using a debit card. Certain credit cards might even offer supplemental perks like travel insurance, automatic elite status in certain hotels’ loyalty programs, free nights and more.

Airline Tickets

Airline credit cards and other travel credit cards offer extremely attractive rewards on flights. In addition, you can sometimes get a host of other benefits, like priority boarding, free checked bags, upgraded status levels, in-flight purchase discounts, credits for TSA PreCheck or Global Entry, and airport lounge access. Many cards also offer travel insurance.

So, while you certainly can book a flight without a credit card, it’s not a great idea.

Restaurants

Plenty of credit cards offer excellent rewards on dining. In addition, restaurants are fruitful hunting grounds for fraudsters intent on copying your card information, as you’re putting your plastic in the hands of complete strangers. It’s thus best to keep your bank account out of things and instead benefit from a credit card’s $0 fraud liability guarantee.

Transactions While Traveling

It’s best to play things safe when traveling with the extra fraud protection that credit cards provide, not to mention that it’s far easier to get a no foreign transaction fee credit card than a no foreign fee debit card. Credit cards are also the cheapest way to convert currency.

When to Use a Debit Card

Small-Dollar Transactions

Some merchants simply may not accept credit transactions under $10, so it’s best to have a debit card on hand for those cases. And with tiny transactions, you’d only earn a few cents in rewards anyway, so you’re not missing out on much.

Cash-Only Transactions

Withdrawing cash from an ATM is much cheaper with a debit card than getting a credit card cash advance. It could even be completely free if you use your debit card at an ATM that’s within your bank’s network. On the other hand, credit card cash advances result in expensive fees and start accruing interest right away at a high APR.

Cash Back at the Register

Only a debit card offers this feature, and only at certain retailers such as supermarkets. Keep in mind that you’ll want to select the “debit” option rather than “credit” when prompted at the point of sale. In order for the transaction to go through you’ll have to enter your debit card PIN, and you won’t be able to put in your PIN if you select the “credit” option.

Person-to-Person Payments

Peer-to-peer payment services like PayPal and Venmo usually charge lower fees if you use a debit card rather than a credit card. This isn’t always the case, though. For example, Amex Send & Split allows you to send money to other cardholders through PayPal and Venmo without fees.

We ultimately recommend using a credit card for as many purchases as possible. Credit cards have superior fraud protection and make fraud much easier to deal with in a practical sense. Plus, most people would prefer to have their credit line tied up by a hold from a gas station or hotel chain than their liquid cash. Credit cards get you rewards, too.

Credit or Debit Option When Using a Debit Card

One of the most confusing things that debit card users encounter is the option of choosing “debit” or “credit” after swiping their cards. The question seems counterintuitive; you’re using a debit card, not a credit card, so you’d obviously select “debit” – right? Not necessarily.

The real choice you’re making is whether or not to validate your purchase using your account PIN:

If you select debit, you’ll use your PIN and money will be removed from your account immediately.
If you pick credit, you may need to sign, and the transaction will likely take a day or two to clear.

Signature debit card transactions offer consumers better fraud protection than PIN charges, so we typically recommend selecting the credit option at checkout. Interchange fees for such transactions are more favorable to card issuers, so they give consumers a higher level of fraud protection as a means of promoting such purchases. What’s more, if your debit card offers rewards, you may only be able to earn them if you select credit when making a purchase.

Choosing debit and verifying the transaction by inputting your PIN is really only necessary if you need cash. You can’t withdraw cash at an ATM or store checkout without providing a PIN.

Credit or Debit FAQ(13 questions)

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Upvotes

What is the difference between a debit card and a credit card?

WalletHub

The main difference between debit cards and credit cards is that a debit card is linked to a checking account, while a credit card is linked to a line of credit. When a purchase is made with a debit card, the funds immediately come out of the bank account. When a purchase is made with a credit card, it is “charged” to the credit line to be repaid later.

Top Differences Between Credit Cards and Debit Cards

Using a credit card builds credit; using a debit card won't. Credit cards report account information to the major credit bureaus each month, allowing users to build a track record of responsible borrowing. Debit cards are not included on credit reports.
Credit cards give rewards; debit cards generally don't. Many credit cards give cash back, points, or miles in return for each dollar in purchases charged to the card. Some credit cards even have initial rewards bonuses for spending a certain amount within a few months of opening an account. Most debit cards don't give rewards for purchases – though you can get some nice checking account signup bonuses.
Debit card fraud is more of a headache than credit card fraud. All four major credit card networks – and all 3 debit card networks – have a $0 fraud liability guarantee. But credit card users have time to spot and handle the fraud before they pay the bill, while debit card users pay for fraudulent transactions at the time of purchase.

So, even though cardholders usually aren't liable for fraud on either type of card, it may take a while for debit card users to get their money back, while credit card users won't ever lose the money. Plus, debit card protections are not as favorable if a PIN is used to complete the fraudulent purchase.

Credit cards and debit cards may not look very different. Both debit and credit cards have a card network logo – and both come with an EMV chip on the front for an extra layer of security when making transactions. But they are quite different in practice.

In fact, the differences are big enough to make an impact in the lives of those who use them. Generally, credit cards are better in fraud cases and to build credit, but they also have their downsides. Debit cards give users peace of mind knowing they won't spend more money than they have, but they also won't build credit and most of them don't earn rewards, either.

Upvotes

Can you pay a credit card with a debit card?

Maria Adams, Credit Cards Moderator

No, you cannot usually pay a credit card with a debit card, at least not directly. However, you can pay a credit card with the bank account that your debit card is linked to, by doing an electronic transfer. Whichever way you choose to pay your credit card bill (online, over the phone, or by mail) there is usually no option to enter any kind of card information as a payment method. That's among the reasons why...

Upvotes

Should I use my credit card for everything?

WalletHub

You should use your credit card for everything you would otherwise buy with your checking account or debit card, as long as credit cards are an accepted form of payment. It's beneficial to use a credit card for daily purchases because credit cards offer $0 fraud liability guarantees, and you could be earning extra rewards by using a credit card.

Reasons to use a credit card for everything:

Fraud is easier to...

Upvotes

When should I use my credit card?

Christie Matherne, Credit Card Writer

You should use a credit card when you are making a big purchase, building your credit, traveling overseas or domestically, making hotel or car rental reservations, spending money in an emergency, and even making everyday expenses. In fact, if you can use a credit card for a purchase, you probably should, because all credit cards offer a $0 fraud liability guarantee.

If someone does steal your credit card information, all fraudulent charges will simply be cancelled, which is...

Upvotes

Is a Mastercard a credit card or debit card?

Ryan P Page, Staff Writer

A Mastercard can be either a credit card or a debit card. Mastercard is a payment network, so it supports several types of cards, including credit cards and debit cards. Plus, it is responsible for processing any transactions made on the network.

Comparison of Mastercard Credit Cards and Debit Cards

Type of Mastercard:	Credit Card	Debit Card
Source...	Borrowed money up to a credit limit.	Linked directly to your checking or savings account.

Upvotes

Should I get a credit card or debit card for international travel?

WalletHub

To decide whether you should get a credit card or debit card for international travel, it's important to consider aspects like fraud protection and costs associated with purchases and cash withdrawals.

All major-issuer credit cards and debit cards come with $0 liability guarantees, meaning you won't be held liable for any unauthorized charges. However, credit cards do make fraud easier to deal with.

Having said that, our suggestion is to use international credit cards for purchases and international debit cards for cash withdrawals...

Upvotes

Should I get a credit card?

WalletHub

Yes, you should get a credit card. More specifically, you should get your own credit card account if you're at least 18 years old, and you should get a parent to make you an authorized user on their credit card account when you are too young to get a credit card alone.

There are many reasons to get a credit card, including convenience and earning rewards on purchases, but the best benefit is building the...

Upvote

Is a credit card a bank card?

Adam McCann, Financial Writer

A credit card is sometimes considered a bank card. The term “bank card” usually refers only to cards that are connected to a depository bank account, such as a debit card or ATM card, but it can be used to describe all cards issued by a bank, including credit cards. On the other hand, credit cards issued by credit unions would not count as bank cards.

How Credit Cards Differ From Other Bank Cards

...

Upvotes

Can you get a business credit card with no revenue?

Chip Lupo, Credit Card Writer

You can get a business credit card with no revenue, though you will need to list personal income to have a chance of being approved. You can simply enter $0 in the revenue field on the application form if you have no business revenue yet.

What to Know Before Getting a Business Credit Card with No Revenue

You may include personal income on your application. Any income that you earn – such as salary and wages...

Upvotes

What does debit card mean?

WalletHub

Swiping a debit card is the exact same thing as writing a check. When you buy something with a debit card, the purchase price is automatically deducted from your checking account. You then receive your monthly purchase statement from your own bank, but you do not need to make any payments because the money has already been withdrawn from your checking account.

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